The energy sector is performing strongly in Europe, with Eni and Saipem rising in Milan

 (Il Sole 24 Ore Radiocor) - The double surge in oil and gas prices is boosting energy stocks in Europe. The Stoxx 600 Energy index is trading not far from the highs reached last May, when Brent was trading steadily above $110 a barrel. European oil companies are benefiting particularly from this trend: on the Milan Stock Exchange, Eni and Saipem and Tenaris . There is also buying interest in other major European companies: Shell is up in Amsterdam; TotalEnergies is rising in Paris; and Repsol is performing well in Madrid.

The sector is being driven by the new surge in energy commodity prices. In one of its latest analyses, Goldman Sachs has revised its oil price forecasts upwards, assuming that disruptions to Middle Eastern shipping routes could continue until 2027, whilst maintaining a degree of caution regarding the extent of the rise. This is because ‘OECD commercial oil stocks – a key indicator of crude oil prices – have fallen only marginally since the start of the war’ and the adjustment in supply in the region is expected to continue. According to Goldman, in fact, the global deficit has already fallen from around 7 million barrels per day in March ‘to one million in the third quarter, thanks to the partial recovery in production in the Gulf’. Meanwhile, Brent crude is back approaching the psychological threshold of $100. In Amsterdam, TTF gas has surpassed €75 per MWh, reaching its highest level since the end of 2022.

Another key factor, according to the experts, will be ‘the new pipeline capacity’ which is due to come on stream at the end of 2027 ‘and the fact that the United Arab Emirates and Saudi Arabia will eventually deploy their reserve capacity’. Production in the Gulf “has already improved and could return to pre-war levels by the second half of 2027”, concludes Goldman Sachs.

The rise in crude oil prices is also boosting BP, whose share price in London has risen above the average of its competitors. Indeed, Citi also sees a potential specific catalyst for the share price in exploration: according to analysts, BP ‘could gain 30 per cent more than its current performance’ if its ongoing activities prove successful. The Brazilian offshore discovery at Bumerangue is cited as the most promising prospect and, together with projects in the United States, Venezuela and Iraq, could extend the group’s reserve life to 14 years, ‘compared with the seven years estimated at the end of 2025’.